The government is unlikely to make any changes in the commodities transaction tax (CTT) in the Union budget, amidst demand from exchanges to scrap the levy.
The imposition is said to be detrimental to the growth of futures trading in the country. There is no reason to suggest that CTT is detrimental and the tax has been there for the last few years, an official source said.
There are several other factors, which are responsible for the fall in turnover of commodities futures, he added. Brokers and commodities exchanges have sought scrapping of CTT so that more participants can enter the market to expand the trading base. Last year too, they had demanded that CTT be abolished.
“To make Indian commodity derivatives markets at par with global markets, the incidence of tax should also be similar,” said Sanjit Prasad, MD and CEO of ICEX, which launched diamond futures in India.
The CTT was introduced by the UPA government in the 2008-09 budget, wherein it was proposed to levy tax at 0.017 per cent. But it was ke?pt in abeyance and no noti?fication was issued after exc?hanges and traders compl?a?ined against it.
In the 2013-14 budget, CTT was re-introduced at the rate of 0.01 per cent. But this time, the levy was restricted only to non-agricultural commodity futures like gold, silver, crude oil and natural gas effective from July 1, 2013. Later, in February 2015 the list (to which CTT applies) was upgraded to 61 commodities, some of which even not traded then.
The turnover of main 3 commodities exchanges – multi commodity exchange, national commodity and derivatives exchange and national multi commodity exchange – increased to Rs 68.14 lakh crore in 2016 calendar year from Rs 66.49 lakh crore in 2015.
But the business is still lower, as compared to the record Rs 174.70 lakh crore achieved in 2011. Bullion and metals had a share of more than 70 per cent in the record turnover. At the current rate of CTT, a seller pays Rs 1,000 for a trading in commodities futures that total Rs 1 crore.
The Securities and Exchange Board of India (Sebi) is reported to have been considering allowing options in select commodities futures. In India, banks and FIIs are not allowed to trade in commodity futures. The regulator had allowed forward contracts in September 2014, but trading in agricultural commodities in that segment was suspended in January 2016 to check any speculative activities.
The imposition is said to be detrimental to the growth of futures trading in the country. There is no reason to suggest that CTT is detrimental and the tax has been there for the last few years, an official source said.
There are several other factors, which are responsible for the fall in turnover of commodities futures, he added. Brokers and commodities exchanges have sought scrapping of CTT so that more participants can enter the market to expand the trading base. Last year too, they had demanded that CTT be abolished.
“To make Indian commodity derivatives markets at par with global markets, the incidence of tax should also be similar,” said Sanjit Prasad, MD and CEO of ICEX, which launched diamond futures in India.
The CTT was introduced by the UPA government in the 2008-09 budget, wherein it was proposed to levy tax at 0.017 per cent. But it was ke?pt in abeyance and no noti?fication was issued after exc?hanges and traders compl?a?ined against it.
In the 2013-14 budget, CTT was re-introduced at the rate of 0.01 per cent. But this time, the levy was restricted only to non-agricultural commodity futures like gold, silver, crude oil and natural gas effective from July 1, 2013. Later, in February 2015 the list (to which CTT applies) was upgraded to 61 commodities, some of which even not traded then.
The turnover of main 3 commodities exchanges – multi commodity exchange, national commodity and derivatives exchange and national multi commodity exchange – increased to Rs 68.14 lakh crore in 2016 calendar year from Rs 66.49 lakh crore in 2015.
But the business is still lower, as compared to the record Rs 174.70 lakh crore achieved in 2011. Bullion and metals had a share of more than 70 per cent in the record turnover. At the current rate of CTT, a seller pays Rs 1,000 for a trading in commodities futures that total Rs 1 crore.
The Securities and Exchange Board of India (Sebi) is reported to have been considering allowing options in select commodities futures. In India, banks and FIIs are not allowed to trade in commodity futures. The regulator had allowed forward contracts in September 2014, but trading in agricultural commodities in that segment was suspended in January 2016 to check any speculative activities.
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